Does Inventory Really Explain Home Sales Slump?

Almost everyone has said it or heard it: Existing Home Sales are in the toilet because there's no inventory and there's no inventory because no one wants to give up their 3% mortgage when rates are 7%. "There are simply not enough homes for sale," according to NAR Chief Economist Lawrence Yun. "The market can easily absorb a doubling of inventory." To be sure, more inventory would be a good thing in almost every regard. A doubling of inventory would likely keep prices in check or push them slightly lower, but it might not conjure up as much buying demand as you might assume. Two separate stats in today's Existing Home Sales data illustrate the point. The first is for inventory in terms of UNITS. This chart makes it seem as if inventory is in line with all time lows and not building as quickly as it normally does at this time of year. But the takeaway changes a bit when we look at inventory in terms of "months of supply." Since it's not incredibly easy to quickly glean the takeaway from the two charts above, here you go: in terms of units, inventory is nowhere near mid-2020 levels while "months of supply" is well above. Let's zoom in: All that to say: inventory alone is only part of the problem. There's also definitely a demand problem in the housing market, likely due to rates, program availability, and other lesser factors. After all, sales aren't doing great since attempting to bounce at the beginning of the year.

July 20, 2023 Download our Mobile App: Download our Mobile App: Housing News Does Inventory Really Explain Home Sales Slump? Almost everyone has said it or heard it: Existing Home Sales are in the toilet because there's no inventory and there's no inventory because no one wants to give up their 3% mortgage when rates are 7%. "There are simply not enough homes ... (read more) Mortgage Rate Watch Mortgage Rates Jump Back to 7% Some of today's news says mortgage rates are much lower than last week. And here I am telling you they're higher. Who should you believe? Easy one! Believe me. What I just told you is accurate. The other stuff is stale info.&n... (read more) MBS Commentary Step Away From The Screen Watching the bond market in real time can be stressful if you work in a highly rate-sensitive industry. There's a tendency to get caught up in the intraday movement on any given day as if it had a big impact on the bigger picture. That sa... (read more) Rob Chrisman Correspondent Programs; STRATMOR and Customer Service; Credit Products and News; Training and Webinars Ever see the movie “Cocoon”? Is there an X-rated version? Seven of the 10 fastest-growing metro areas over the past year are in Florida. The Census Bureau tells us there was population growth for about two-thirds of U.S. metro areas during this time,... (read more) Mortgage Rates 30 Yr. Fixed Rate 7.00% +0.10% Rate Change Points Mortgage News Daily 30 Yr. Fixed 7.00% +0.10 0.00 15 Yr. Fixed 6.37% +0.05 0.00 30 Yr. FHA 6.60% +0.08 0.00 30 Yr. Jumbo 6.98% +0.03 0.00 5/1 ARM 6.95% +0.03 0.00 30 Yr. VA 6.59% +0.06 0.00 Updates Daily - Last Update: 7/20 15 Yr. Fixed Rate 6.37% +0.05% Rate Change Points Freddie Mac 30 Yr. Fixed 6.78% -0.18 0.00 15 Yr. Fixed 6.06% -0.24 0.00 Updates Weekly - Last Update: 7/20 Rate Change Points Mortgage Bankers Assoc. 30 Yr. Fixed 6.87% +0.29 0.66 15 Yr. Fixed 6.36% -0.06 0.72 30 Yr. Jumbo 6.89% -0.15 0.64 Updates Weekly - Last Update: 7/19 MBS / Treasuries UMBS 30YR 5.5 99.45 -0.38 Price / Yield Change MBS UMBS 5.5 99.45 -0.38 UMBS 6.0 100.80 -0.27 GNMA 5.5 99.48 -0.33 GNMA 6.0 100.56 -0.23 Pricing as of: 7/20 5:31PM EST 10 Year US Treasury 3.8560 +0.1080 Price / Yield Change US Treasury 2 YR Treasury 4.843 +0.075 5 YR Treasury 4.104 +0.122 7 YR Treasury 3.993 +0.124 10 YR Treasury 3.856 +0.108 30 YR Treasury 3.913 +0.072 Pricing as of: 7/20 5:31PM EST Latest Video The Fed should be considering MBS asset sales, says Jefferies' David Zervos 79% of Americans say economy is in fair or poor state, CNBC survey finds Home prices on track for 8% increase year-over-year, says Black Knight's An... June leading economic indicators down 0.7%; June existing home sales falls ... Around the Web Marketwatch Bernanke says it is clear Fed will hike interest rates next week, but a September move is 'up for grabs' vox Global Inflation Implications After Russia Scraps Black Sea Deal CNBC Treasury yields rise as investors consider economic outlook CNBC These 10 states are America's strongest housing markets, offering buyers the best value Calculated Risk Blog NAR: Existing-Home Sales Decreased to 4.16 million SAAR in June; Median Prices Declined 0.9% YoY in June Reuters Strong US apartment construction suggests slide in rental costs Calculated Risk Blog Lawler: Early Read on Existing Home Sales in June & 4th Look at Local Markets CNBC China says two policies to support business coming soon Federal Reserve Federal Reserve Board announces two enforcement actionsagainst Deutsche Bank AG, its New York branch, and other U.S.affiliates Calculated Risk Blog Housing Starts Decreased Sharply to 1.434 million Annual Rate in June Calculated Risk Blog June Housing Starts: Record Number of Multi-Family Housing Units Under Construction Calculated Risk Blog Hotels: Occupancy Rate Up 0.1% Year-over-year Calculated Risk Blog AIA: Architecture Billings "Stable" in June; Multi-family Billings Decline for 11th Consecutive Month

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